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tv   Bloomberg West  Bloomberg  January 19, 2014 7:00am-8:01am EST

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>> welcome to "bloomberg west." i am emily chang. every weekend we'll bring you the "best of west," the top interviews with the power players in global technology and media companies that are reshaping our world. big news out of china. apple has started selling their iphone on china mobile, the largest carrier. it opened apple to more than seven hundred million subscribers.
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it will broaden their reach within the country. tim cook visited china and hinted at a deeper partnership in the future. i was joined by sam grobart to discuss. we talked about the deal and what it means for apple. >> a huge deal for apple. it gives them a potential boost as they are sent. there market shares number and little flat or a little bit down. you go put this and the content. the largest carrier in the u.s. is verizon. a hundred million subscribers. 700 million figure for china mobile might include other things not balls but it is twice as big as verizon. >> apple only has 10 stores in china. they are trying to increase the number. this adds 3000 retail outlets. >> apple stores have been very successful. china, obviously, it is a big plays. cap it into that network among 3000 of them, it is huge for apple. it gives it way deep into the country that is more than the big cities. >> when it comes to cost, that has been the big problem.
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the iphone. it is so expensive. $870. $730. that'll supposedly the cheaper one. >> do not tell tim cook. he said it was pulled to the different one. we see this and the prices. consider how that compares to the competition that apple has to face. unsubsidized cost for xiaomi is $300. significant difference. >> xiamoi makes phones that look like iphones. >> the ceo models himself off steven jobs. >> i spoke to the ceo of baidu about this. robin said chinese people want bigger screens.
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samsung and other companies offer this. i spoke with robin li about apple. listen to what he hasto say. >> apple has experience in the u.s., but in china, the chinese characters are very different from english. you need an input engine method. apple does not have a good one. they did not allow it to be uploaded. >> that was interesting. i did not realize that about chinese characters. >> apple is a closed system. it is hard for them to adapt to different markets. >> when it comes to the competition, there is samsung which is the leader. apple has a lot of competition. there is xiaomi. >> they are doing better than apple. >> a lot going on. we have the coo of huawei
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joining us from san francisco. you are pulling back on your core business and in the united states. i believe when you are taught french journalist, you had difficulty with the u.s. lawmakers concerned about your relationship with the chinese government. can you talk to us about your you business right now? -- your u.s. business right now? >> we are not a leaving the u.s. we are growing our business. i know there are a lot of media about the interview. when utah have $40 billion company and focus him -- when
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you have a $40 billion company and you are caught in the crossfire of two large world economic powers, it is hard to not get sentimental. the truth is, one of the greatest markets. we like it here. >> does it mean you will continue to sell your telecom equipment to you as businesses? u.s. businesses? >> i am response will for the enterprise business and mostly i.t. engaged in a lot of partners and i.t. professionals about our product line and so far the reaction has been extremely positive. many people would like to see a supplier like huawei, who can do computer storage and networking and who also has a very solid financial. >> one of your main competitors has been cisco.
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you trail right now. you are growing faster than they are. one of the things people talk about is your ability to, with lower profit margins. what you hear from your customers about these prices you are able to offer? are they surprised? >> well, actually, what we focus on is the next inflection point. not our competition per se. we inc. the bass competition olds who can do cloud computing we think the best competition
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is who can do cloud computing. we need a large platform. we had to reinvent those equipment to adapt to the cloud infrastructure and that is what we are good at. the networking infrastructure and cloud computing infrastructure provider for 15 top world carriers. we are ready. >> jane, i want to ask you a bit about what is going on in the united states, the revelations abide edward snowden and the extent of the surveillance policy. has that impacted your business at all? has it give you a boost with companies saying we are worried about the the u.s. government relationship with some of the companies we have a working with? >> well, actually, on the contrary.
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giving everybody perspective that we need to separate politics from business. government needs to do what they need to do and that is the situation for both of the u.s. and china and others. meanwhile for business, we are private company and trying to innovate. expand over 14% of our revenue. and it makes the conversation -- >> that was jane li. a u.s. appeals court strikes down net neutrality and it can have an impact on tech companies especially netflix. that story is next. ♪
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>> this is "that's a bloomberg west."
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a shift could be coming for everybody who uses the internet. net neutrality rules have been striking down that require all internet users be treated equally. this means companies may potentially charge more for certain kinds of content. the fcc has vowed to fight it. i spoke to sam grobart and jon erlichman. i asked what it could mean for netflix. >> i think immediately, the stock market reaction with the shares down. do they have to change the pricing model? the all you can eat, does it go away. the quick answer is, not just yet. first of all, everybody loves to talk about house of cards and orange is the new black, people using netflix in a big way. the numbers would suggest that spending one hour on netflix every day even though it eases up broadband is not near the
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total television that people are watching. it is the early days for this. it is something that everybody in the industry is thinking about for sure. >> i am curious. a lot of talk among advocacy groups what it can do for competition. generally speaking, the internet has been flat and open and will going to eight tiered model. -- go into a tiered model. what does it mean? >> if you think about the lobbying power, all of the internet giants getting their way, that's a whole different story. if you think about the companies that have been able to set up shop very quickly through amazon web services, if they have to pay changes, that may not exist.
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that is a bad thing for a big player because maybe they do not get the business from that player. i do think if you think about cable versus the internet, sony talking about an internet tv service. we know intel was talking about that. maybe amazon. all of your tv, cable is come to the internet and companies are offering it for less, cable pays that. they will fight you. the net neutrality title is boring. behind the scenes, huge lobbying effort and battle between traditional tv world and internet. >> we are talking about tv and count. net neutrality advocates are painting a nightmare scenario where browsing is one tier and facebook and twitter is another and you have netflix and
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spotify, the most expensive on top. it could have major implications for everyone. but i think it could. we talk about the battle with the biggest players. sam raises the question about the smallest players. netflix, they could probably afford to pay a little warm weather forcing the consumer to pay more or verizon or whoever is dividing. you could make the argument that those names that you mention whether a facebook or a netflix, they become more powerful because of their price advantage because they got to scale earlier. i really think at the end of the day, it will be positioned that the consumer should not have to
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pay more just because of that are watching a lot. it comes down to how much you are gobbling up, how much broadband you are using? nielsen said we but eight hours a day. netflix diehards are watching a lot but not that amount. the technology, companies concerned about going to hd and ultra hd and also worried about compression technology. not eating up bandwidth. they are thinking about that in the same way. maybe it allows it to come to you without getting to this stop in the road where everybody is wondering if prices will change. >> might this lead to possibly if it rolls out, sponsored access, wireless and data access from larger media companies which could give them an advantage where a smaller one will eat up your data? >> i think this opens the door
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for a lot of people to put their brand or message on the desk and positioned themselves in that way. i think if you go to the example of amazon web services which has been the great place for people trying to take advantage of the stuff available to them, so -- absolutely, something to watch for. >> sam grobart and jon erlichman. we are weeks away from a meeting of the minds. tim cook will be sitting down with a samsung executive and we would tell you all of the details coming up next. ♪
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>> welcome back. i am emily chang. we are a month away from apple and samsung, and samsung, cap agreed to mediation in february. -- and they have agreed to
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mediation in february. we started by asking bryan about the meeting and whether he think it will yield anything new. >> i think this is a real effort to put all of the legal battles behind them. a distraction for both companies. they are using money that could be going into product. they want to get this behind us and focus on our own products. >> is it possible? >> it is. a lot of bad blood. if they have to come to the table with a solution and hopefully they will and will be great for them not to be tied up in court and focus on what is going on. let them fight it out into the public. >> you talk to either of the companies and they said they were rather not be doing this.
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cook said i hate litigation. hate it. samsung feels the same way. there is a lot of law firms that are happy. they are make a ton of money. >> a lot of people would like to see it. my prediction is it will end at this year. >> it will be worked out. what sounds some will say we copied the iphone early on and one not to do it. -- samsung will say we copied the iphone early on and we will not to do it. >> you saw some interesting stuff. samsung came out with connected home. >> a big trend. >> it leaves me to wonder what apple is doing right now. >> they are not doing anything with connected home. it is interesting because with google acquisition of nest, google cares a lot about it. connected to the thermostat. other companies are moving. qualcomm showed the way their devices and appliances are connected to the future. they are doing a new gateway.
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it will divert bandwidth where it is needed. apple does not seem to care about this market. >> there is one way that are connected. it all comes through this. >> and that is true. >> if you have the new services and ties to a smart phone, apple is hoping when you think of a smart phone you think of theirs. >> does it matter if they are missing this a boat? the home is the fabric of everything. >> the perception is apple is not trying to buy any pieces of the puzzle for the smart home. they do have the app. if you do see a television, that could be the way that they get into the smart home business. they are not going after these appliances. what you think the television
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will happen this year? but there is no evidence. there is evidence we could see a smart watch or wearable this year. i do not think there is evidence that we will see a tv this year. >> do you think the tv industry, panel making, it has been a lousy business. >> not a great one. we are at the beginning of seeing an upgraded cycle from traditional hd to 4k. twice the resolution. >> samsung came out with a huge one. >> lg. sony. all of them are bendable or curved. this is an opportunity for apple to get in the television business. >> you think they will? >> i think they will. they play around with a lot of things that do not come to market. this might be one. it is uncertain. >> can i talk about something else i saw at ces? the connected car. >> apps and parcels one of the biggest trends.
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ford and jim and mercedes -- gm and mercedes. the little screen in your car is getting smart. facebook and pandora and available in the vehicle. >> google with android. they are trying to find partners. >> it will be a big battleground. ios for cars. it is going to integrate with ios and we will see it throughout the year. google is trying their own. >> give me a time frame. cars have a long lifecycle. >> if you buy a car, you have an option to the connected car. if you buy a tesla, you have it. >> toyota models that can do pandora. >> there are a few cars in the act as a wi-fi hotspot.
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if you buy a new car, you can have that. it depends. >> when you look at google and apple, how do see them stacking up in terms of how much of the territory? >> apple will win the car war because they are not trying to own the screen but be compatible. and let them own the screen. >> google owns the screen in the audi. it is valuable real estate. >> automakers are conservative. this speaks to apple's strength. it is updated system. android with some of the
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fragmentation is more the wild west. not sure what you might be getting. the carmakers say i like dealing with one company knowing what i am getting. >> let's talk more about 3-d printing. i mean, will i be wearing 3-d printed clothing and food? >> in 10 years, you will be doing some of those things. ces, a lot of those stocks of moves in 2013.
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3-d printing. up 100%. some of the smaller players up even more. what was different is you got a glance at the whole ecosystem. there's a whole ecosystem of companies working on 3-d scanners and to the software to make it easier so you can have the option of buying the 3-d printer in your home and making an iphone case or it rains or what ever you want. the big question is where is the tipping point? we do not know. we do know it is getting easier and cheaper to buy the machines. >> how much does it cost? >> a good one for $1000. it can make anything in a small form factor. for $500, you can buy a mediocre one. there are a few stores right in new york. you can actually go in and see what is possible now. we will see more across the country. a very important trend. >> sam grobart with brian blair. from millions of dollars in debt to equity, foursquare ceo tells us about the mobile tech company come back. ♪
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>> this is best of "bloomberg west." we are talking about foursquare. they had doubters when they launched. they raised $41 million in debt. many wrote them off as dead. the company has made a comeback, and in $35 million. i recently sat down with sam grobart and foursquare ceo dennis crowley. >> we have been about location discovery. the things we figured out last year were how to monetize the universe. the second big piece of it is exploring what we can do with
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ambient location. we think about what happens if you do not check in wherever you go. if your device knows you're in a new city or part of town or russia for the first time. you just walk into a bookstore for the first time. what can you do with those interactions? we continue to raise financing and are well-funded. we want to get to continue working toward our roadmap. >> what can you tell us about growth? both times we talked about 6 million check-ins a day. is that growing? >> there are a lot more people using foursquare. they're finding new places. >> can i bring in a personal anecdote? i was never a big foursquare user.
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i did not worry about checking in. i am married and have kids. when i realized i could use it as a recommendation app, it was not about broadcasting my presence but i could see were my friends had been and what they like, it snapped for me. that is more in line with what i would like going forward. >> the check-in may not be for everybody, but people use it for recommendations. we get a strong signal that this is something the users love. we are continuing to explore that. we love that foursquare recognizes when you enter a place. if you walk into a clothing store, we can alert you. there is a special here, you can use your amax and serve 20%. this is telling you about the things that interest you.
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that is a powerful thing. >> talk about the moneymaking potential. you're expected to make a lot more money this year than you did last year. how? >> we build tools that are effective in helping drive customers and local businesses. one of the things that we do better than anyone else is we prove the effectiveness of the app. we have not had a way to generate or evaluate the number of people who came into your shop and a number of people who checked in. that is a check that we can do that no one else can do because we have all those check in. >> can you give us any numbers? >> we do not have to share a lot of that. i would love to, but i do want to surprise. last year was a great year for us in terms of generating revenue and getting product in
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the marketplace. every quarter, we doubled revenue. we are expecting good things by the end of this year, too. >> i guess you are into wearables. do you have a future in wearable technology? >> we think about what is of best version of foursquare. not one you have to pull out of your pocket and use, what are the other displays it we might access? what can we do with displays of the wrist? what can we do with google glass? we have a prototype where you walk into a place it will buzz you and tell you friends are nearby or tell you about his two places. >> sam grobart and foursquare ceo dennis crowley. our special series on ai beyond robots is next. ♪
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>> welcome back to the best of "bloomberg west." i'm emily chang. we did a special series on artificial intelligence. we take a look at how ai has changed the way we communicate and will change the way we live our lives in the future. i had a chance to sit down with david ferrucci, a scientist and creator of ibm's watson supercomputer. we started by asking how watson came to be. >> ibm research is about pushing the envelope and breaking new ground and taking on grand challenges.
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the executives at ibm thought could we compete a computer that could compete with humans at human tasks like "jeopardy." we could do that. for my entire life, it was about getting computers to them it the way humans think. take it step by step to see we could do it. >> isn't one of watson's great functions his ability to function with natural language? >> it is not just about moving bits from place to place, it is what they say in the meaning behind it. ultimately, meaning trumps data. there is too much out there. how do i get an understanding of it? >> where would you say we are, at the toddler stage or the adult stage? it seems like there's a long way
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to go. >> it is not even road. for example, when we look at a second grade or toddler, it is not like that. if you do something that is extremely sophisticated, other areas it is going to seem really stupid. computers process data differently than humans. can we get more of a convergence? can we get machines to think more like humans? can they process data in a similar way? that is a much harder challenge. there is a lot of work to do in that. >> the ceo of foursquare is with
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us as well. >> we think about the intersection between people asking computers questions and for advice, versus computers being proactive and recognizing your context and saying i sense something is going on. >> managing that dialogue and tuning into that context. people wonder how ai is going to progress. they have to collaborate together. there is joint intelligence. i have to learn as the computer from the human. as you work together to solve a problem, that is where the style of learning changes into a different phenomenon. >> can watson feel? can he sense a motion? is that a problem? >> that is a great question. humans and computers are not the same thing. when you and i talk, we use language as an elaborate index
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system to point to our shared experience. that is a human experience. when we speak, i look at you, i do not know if -- the only way i know if you understand is that you are nodding right now. that is feedback for me. my words are linking into your brain and we have a common understanding. computers do not have that. they do not have that human experience. >> nonverbal communication is not happening. >> it is nonverbal and contextual. you are using information around you. you mentioned foursquare, you want to capture context. the more features that let you narrow into what you mean by a particular word or phrase is going to facilitate that dialogue between a human and a machine.
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>> have you seen the movie "her"? >> i loved it. >> it was amazing and it created a thought-provoking and plausible future with a computer that has a sense of humor and understands what you are saying. >> that is the thing. humans are the source of meaning. we are the source of what is funny. we are the source of what is beautiful. we are the source of what is elegant. computers can start to learn and detect that meaning. they are not the source of that meaning. watson can detect a pun, it is not laughing at the pun. you should laugh at it. >> what are the things watson will never be able to do? we talk a lot about what it can do, what will it never be able to do? >> i think you should be careful about saying it never. i like to think of it -- to move from language we have today to a
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deeper understanding where computers can get the sense of a deep meeting and dialogue and collaboration. things are going to have to change in advance. my view is we will see an interaction between human and machine that is quite intimate. you are solving a problem together. the computer does not know the answer. you do not know the answer. you have access to features and see things the computer cannot see. the computer can access data in ways you can't. you work together to solve a
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problem. the computer is learning new things and how you interpret information as it is helping you get the data you need. you get that complementarity that creates a joint intelligence. that is what the future holds. >> that was the creator of ibm's watson. coming up, we head to the lab to meet facebook's newest head of artificial intelligence. you do not want to miss this. ♪
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>> welcome back. we have more of our special series on artificial intelligence. facebook has decided to open a new lab in new york dedicated to artificial intelligence. the man in charge of leading that transformation is a french mathematician and nyu professor with 30 years of experience in the field. sam grobart caught up with the new head of ai at facebook. >> artificial intelligence still has a sci-fi ring to it. the fact is it is in our digital lives. from netflix's movie recommendations to amazon
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shopping recommendation. >> everything you do on facebook or google, there is an ai system behind it. >> he has been studying artificial intelligence for three decades. now he is taking on a new post. he is facebook's head of artificial intelligence. it is their bet on the future and what they will do with the data they are collecting. >> we have been thinking about the infrastructure, now that they are established, they want to look forward 10 or 15 years from now. >> there has been a talent grab. >> ai plays an important role in computers. there is a race between companies to establish some selves in this field. >> recommendations are nice, but that is old hat.
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the next step in the field is using ai to improve the computer's ability to see and hear. >> we feed the image to webcams, it tells us what category the object is. >> how would something like that of applied to the future? >> the system will identify the object that is in the picture. it will make things easier to search. we can organize your pictures in a way that are more sophisticated. >> an idea of what you want before you have indicated it, they want to use it for another cool application, making money. >> interesting. they are using ai to make facebook better for me. might it get a little creepy? when you think about facial recognition, people get scared. >> i talked about this with
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them. are you ever trying to balance what you are capable of doing with what the company or the public wants? we want to balance the expectation of the user. there were so manytoys to work with, companies pushed things out and got creepy. we are in a more mature place where they're trying to measure things out and get us on board. >> we pulled out an interesting stat. we talked about google buying nest. google has spent $17 billion buying companies over the last two years. facebook and apple and amazon and yahoo, they spent $13 billion combined. do these companies have to worry about google more than they already do? >> besides bringing the expertise into the company, there is a benefit here. he is a rockstar among ai
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researchers. if he is going to be working at facebook, that means all of these other people who work in the field are going to be paying close attention. there is competition for other leading likes of that field. it they all know each other. this is another way in which they compete. >> this is mark zuckerberg's grand vision. he sat down with the president of stanford university yesterday. 20 years out, what is the big thing? is is what he had to say. >> what is going to be the new thing 20 years from now? >> i think the ability to ask more questions than you can ask a search engine today. we are actively working on that.
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we want facebook and this movement into social apps not just be sharing moments in the day today but also being utility. >> google has been making search more personalized. he is talking about something bigger. >> there is the idea that is not about searching so much as it is about internet services giving you things. presenting them to you actively. it knows that you are going into work this morning. you see this with google now. it predicts that you're going to work, it gives you the weather and traffic. facebook, google they are trying to be more active in presenting
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you with the information you need before you know you need it. >> it uses your social network to answer a question that you asked. it is not just the algorithm answering the question. all of your friends and people you know can chime in as well. >> that broader contextualization of data. you need things like artificial intelligence for that. you are multiplying the information, it is too much for ordinary programming and data management techniques to handle. you have to have something that is thinking on atonement and finding the right information automatically. >> wouldn't be better if computers can solve all our problems? >> bloomberg businessweek's sam grobart. next week, twitter cofounder will be join us on tuesday. he will talk about his new startup, jelly. it was an early technical up with some famous members, including the founders of apple.
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we will go inside a reunion of the famous home computer club. ♪
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>> welcome back to the best of "bloomberg west." back in 1975 a group of local engineers and diy tinkerers formed a computer club. the pc did not exist back then. those meetings included steve wozniak and steve jobs debuting the apple one computer. they kicked off the pc revolution in the process. the original members gathered at a computer history museum in san jose for a reunion. take a look. >> before the iphone, the imac, members of the home computer
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club, steve jobs among them, gathered every other week, first in a garage, later on the campus of stanford university. >> it was a social media of its day. >> we are witnesses to a lot. not all of us have the same impact and duration as apple. >> you cannot get far into the history without looking at the meteoric rise of apple. 38 years later, steve wozniak is getting the rockstar treatment at the first reunion. >> everybody talked to me and said they had ideas.
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what should go in a computer and be useful for people? i wanted to be part of this so bad. >> after seeing jobs and wozniak demonstrate their first apple one anna meeting, invited jobs to store the next day. >> when he came in, i said if he assembled and -- i would buy 50 of them. >> the price was $500 apiece. it was their first deal and made them $25,000 in 1976. >> that was their seed capital to get the company off the ground. >> wozniak has high praise for the entire club. >> i could turn an idea into a working device. these were the intellectuals i admired in the world. they talked about society being different. >> jon erlichman, bloomberg. >> that is it for this edition. if you get all the headlines of the top of the hour on bloomberg radio and bloomberg.com. we are on your phone, tablet, and apple tv. ♪
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♪ >> advertising cannot -- anyone anymore. you cannot pull the wool over someone's eyes. >> traditional advertising is finished. being a great company is the new strength. there will be not anything between the consumer and the company.

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